The case against Bitcoin as an investable asset is long and compelling. It has no use case; there’s almost nothing you can buy with a Bitcoin, and it has no return other than higher prices based on an application of the greater fool theory.
A glance at the price chart shows it’s clearly a bubble, the worst in history, worse than NASDAQ in 2000 during the dot.com frenzy and worse than the Japanese stock market in 1989.
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Bitcoin will never be a reserve currency because its capped issuance amount makes its price deflationary, which is unattractive to borrowers. Without a Bitcoin bond market, there can be no securities in which central banks can invest reserves.
Worse yet, the Bitcoin price is a Ponzi scheme driven by the issuance of the stable coin Tether, which has never accounted for the billions of dollars that have been taken from naïve Tether investors. That said, none of this matters.
Bitcoin has become a belief system. The true believers see what they want, hear what they want and are immune to the arguments of the non-believers.
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Bitcoin will never displace the dollar, but it could destroy confidence in the dollar by its all-encompassing impact. This could cause social disorder and contribute to the decline of linear, rational civilization.
My solution to this conundrum is to hold physical gold. For the Bitcoin believers (and others), the solution is always… more Bitcoin.
The market is becoming unhinged. Gold can be your anchor.
Jim Rickards
March 15, 2021
The “Bros” Are Preparing Their Next Attack
[I’m not certain it is as compelling as Rickards appears to claim. And you will notice he is not consistent. He claims it has no use case but how can it “destroy confidence in the dollar by its all-encompassing impact” if it can’t be used for anything?
But I am in general agreement with him. I own zero Bitcoin. I do own some gold.—Joe]
It’s been about a decade since we last bought precious metals. We’ve only just recently started cost-averaging into some cryptocurrency.
I look at gold, and now Bitcoin and some other cryptos, more as an emergency hedge than a primary investment. Different use cases for both, but both fairly low – we hope – probability, so not a large part of our household net worth in either.
By the same token, we have nothing we can’t afford to lose in either metals or bits. It would be unpleasant but not catastrophic.
Bitcoin is based in electro motive force. Which the communists are moving toward total control of.
Power grids are the most fragile part of society. Wouldn’t seem like a good hedge in clownworld.
I like silver better than gold. But only because of it’s anti-septic properties. The latest mover in metals was platinum. Which always priced about 15% higher than gold. (London strikes again.)
To me, inflation is always about what people need. Right now rich people need a way to keep their wealth. Bitcoin in good times. Metals in harder times.
With the riots they want guns to protect themselves.
And food when the stores close.
Inflation hedge? Always been a crap shoot. Always will be.
I spent a bit of time looking into “gold protects against inflation” by comparing the price of gold in terms of labor in 1849 and the price of gold today, in terms of labor.
For the most part, gold is worth less (hard) labor today than it was in 1849.
From my prospective, this means that gold would not have been a good investment.
What gold and other metals do is to let you conserve wealth over the short term. And for small amounts of wealth, lower priced metals are likely to be more useful.
Today you can buy an ounce of silver on the spot market for around $26.00. American Silver Eagles are running $38.00. Rounds are around $30.00.
That means at a 1 oz silver round is worth 2 to 4 hours of unskilled (burger flipper) labor. Or about 0.33 hours of skilled (general contracting, backhoe operator) labor.
If you wanted to conserve wealth over an inflation event, I think you will find that silver would be useful. Gold is just two expensive to be able to trade for labor or goods.